Is It Time to Cruise Now, Pay Later?

We’ve seen the buy now, pay later financing model applied to many things. The original use case centered around apparel and other consumer goods. Then BNPL went B2B and vertical. Then came travel. Now you can buy a plane ticket and even a tank of gas using BNPL.

So this week’s partnership between BNPL player Uplift and Cruisebound, a booking engine for cruises, to let consumers “cruise now, pay later” felt like, just, of course. Uplift focuses on hospitality travel, and retail. And Cruisebound is kind of a Kayak for cruises.

The partnership involves integrating Uplift into Cruisebound’s booking platform. This allows consumers to choose to pay via Uplift as a seamless part of the transaction.

What will be interesting to track is whether BNPL has the same impact on cruise consumers as it has on consumers of other goods. A big rap on BNPL, as well as part of its appeal to merchants, is that it increases basket sizes. So a consumer who might pay cash for a $100 pair of shoes will go for the $200 pair using BNPL. After all, you get the shoes right away but the pain of paying for them is spread out over four payments.

In the Cruisebound context, does this mean a Carnival Bahamas family moves upscale to a first-class cabin on Cunard’s Queen Mary trans-Atlantic journey? Watch out for the icebergs.

More News from the BNPL Front

Here are some other recent developments we’ve taken note of in the BNPL space.

Philly Fed Chain Says Inflation Threatens BNPL

At a recent conference, Philadelphia Fed President Patrick Harker sounded an alarm that we’ve been raising as well recently. How much of a threat is inflation to the stability of BNPL, which is already rocked by dropping valuations and rising defaults?

According to Harker, BNPL players should be pretty worried. He said the business model was fairly stable in a low-interest rate environment. But now the game has changed.

“Forced to borrow at higher rates, these firms are facing pressures they simply weren’t last November. Unsurprisingly, major operators in the space have retrenched, with one of the leading lenders shedding 10% of its workforce last month,” he said, referring to Sweden’s Klarna.

PayPal Show Major BNPL Growth

All the negative press around BNPL often neglects to note that the payment methodology continues to grow. The growth story is obscured by the dark clouds gathering from inflation, rising default rates, looming regulation, cratering valuations, and more.

PayPal reported a big surge in its BNPL volume during the second quarter. The company reported $4.9 billion in volume, a 226% year-over-year increase. PayPal said 22 million consumers used BNPL in Q2.

BNPL for NFTs, Really?

Here’s one we missed when it came out in July. But we caught up with it thanks to the Bloomberg Crypto podcast. DeFit platform Teller is apparently offering a new marketplace where consumers can acquire NFTs using the buy now, pay later payment methodology.

This has a much different risk profile than ordinary BNPL. According to the Bloomberg discussion of Teller‘s “Ape Now, Pay Later” model, Teller has created a marketplace where individual buyers and sellers meet to create BNPL transactions for NFTs. So the lender has limited recourse if the borrower doesn’t follow through and make all the payments on an NFT. There is more to learn here. But so far, it sounds like a great idea.

And the timing could also be better. Once hot NFTs have cooled amid the crypto winter, which has thawed a bit lately as Bitcoin is rising again.

Play Now, Pay Later

It gets weirder. Blockchain-focused VC firm a16z (aka Andreesen Horowitz) is backing a startup called Halliday that offers a buy now, pay later model for gaming and metaverse NFTs. The VC firm led a $6 million seed round for the company. Hashed, a_capital, SV Angel, and others also joined the round.

One twist on Halliday’s model is that it doesn’t impose late fees or other penalties on those who fall behind. Consumers can use Halliday to buy in-game assets. But, although they can use them right away, Halliday maintains custody of the asset until the buyer pays in full.

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